RWE Sells Nabucco Pipeline Stake To Austria's OMV

Austrian energy company OMV says it purchased German company RWE's shares in the Nabucco gas-pipeline project.

OMV said on April 14 it had acquired RWE's 16.67 percent stake in Nabucco but did not provide any details on the sale.

RWE, which joined the Nabucco project in 2008, confirmed the sale and said it had transferred its stake at the start of March.

RWE's withdrawal is the latest blow for the Nabucco project, which once aimed to construct a 3,900-kilometer pipeline to connect gas reserves in the Caspian Basin region to Central Europe.

The European Union-backed project had difficulty convincing potential gas suppliers, namely Azerbaijan, Turkmenistan, Iraq, and Kazakhstan, to sign contracts for deliveries and the estimated cost of the pipeline's construction continued to increase, eventually reaching more than $12 billion.

Shareholders recently scaled down the project, agreeing to build a shorter pipeline from the western Turkish border to Austria and carrying between 10 billion cubic meters (bcm) to 23 bcm annually instead of the original target of some 30 bcm. The new, shorter pipeline has been dubbed "Nabucco West."

Azerbaijan is due to decide later this year which pipeline project it will use to send gas from its massive Shah Deniz field in the Caspian Sea.

Nabucco West, in conjunction with the Turkish-Azerbaijani TANAP pipeline project that replaced the eastern section of Nabucco, is still in the competition to become the European transport pipeline for the Azerbaijani gas.

RWE's decision to opt out of the Nabucco project also affects Turkmenistan, once considered the primary source of gas for Nabucco. RWE is one of only a few European companies looking for gas and oil in Turkmenistan's sector of the Caspian Sea.

Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargas, and Turkey's Botas are also shareholders in the project.

The Reuters news agency referred to "an OMV spokesman" as saying, "You can be pretty sure that this is not going to be the final [Nabucco] shareholder structure," though it was not clear if the spokesman meant more shareholders would join the project or that a reapportionment of shares would be coming.

OMV's acquisition of RWE's shares gives the Austrian major a 33 percent stake in Nabucco West.